happy 15th birthday as well to this network, msnbc. thank you for joining us at this hour. at this hour, all of washington stands on pins and needles waiting to see if a deal can be reached. if a crisis can be averted. if democrats and republicans can come to an agreement on the big fight that's been, frankly, smothering american politics for weeks now. president obama announced earlier today that he wants to see a deal done by tomorrow on the big debt ceiling fight that has consumed every bit of oxygen in d.c. for the last few months. the president saying tonight that congressional leaders are on the clock. they have 24 to 36 hours to get a deal done. as planning a vote that the u.s. government should not default on our debt and shut down, comes down to the wire, we are now inching close enough to the edge here that two of the world's major credit rating agencies have warned that our national credit rating may be downgraded as a result of this standoff.

the day that the u.s. would actually hit the debt ceiling and start going into default and shutting down is august 2nd but this does mean we have until august 2nd before we lose our national credit have until august 2 before we lose our national credit rating. that could just happen right now. because of the uncertainty and because of how long it is taking to get this done. right now, politicians in washington are trying to avoid default by striking a grand bargain on big spending issues and big taxing issues. but the fact remains that the country can avoid this crisis, can avoid default, without some big deal. they could avoid default simply by saying, we don't want to default. that's all they have to do. if democrats and republicans can agree on just that and nothing else, the idea that we don't want to default, that is good enough. it does not need to be a big expansive deal. and it is looking like that is probably how this will end. no big deal will be reached. both sides will only agree that we shouldn't default. and so, therefore, we won't default. but even if it ends like that, simply this is coming down to

the wire now. the president saying tomorrow's the day. and just by definition, this is a fight that has to end soon. the fuse is already lit. we're going to be talking about democratic congressman barney frank in just a moment about how he sees this all ending. but as we head toward an end to this crisis, an end that is likely to reveal the utter pointlessness of the last few weeks of wrangling over a deal that never happened, in the midst of that storm of pointlessness, from presidential politics of all places came today a reminder of what is not pointless. of the real crisis that the country wants washington to be working on, the real crisis that washington hasn't been working on that maybe they can finally start working on once this pointless crisis of their own making finally gets settled. today politico.com got access to a political ad that never ran against mitt romney when mitt romney was running for the united states senate in massachusetts in 1994 against ted kennedy. this never aired, but it was given to politico.com today. check it out.

>> mitt romney says he saved bain & company. but he didn't tell you on the day he took over, he had his predecessor fire hundreds of employees. or that the company was rescued with a federal bailout of $10 million. the rest of us had to absorb the loss. romney and others made $4 million in this deal, which cost ordinary people $10 million. maybe he's just against government when it helps working men and women. >> that is from 17 years ago. the only thing you would have to change in order to run that ad against mitt romney now is you'd have to like change mitt romney's hairdo slightly. see? there you go. that's all you would have to do, and you could just run that ad today. he is running for president now on the exact same basis on which he was running for senate 17 years ago. he is running on his business record as a job creator at bain

capital. that was an ad that did not run against mitt romney when he was running for senate back then. but the campaign ads that did run against him in that campaign are just as prescient and just as astonishing. >> mitt romney's ads claim he created jobs. but what's the record? his firm bought a company in holyoke and moved its headquarters to dallas, texas. he bought a company and fired all 350 workers. told some they could reapply at a 25% pay cut. but many who were pregnant or older were denied jobs. romney made $11 million in two years. he's misled us twice. >> i would like to say to mitt romney, if you think you would make such a good senator, come out here on marion, indiana, and see what your company has done to these people. >> we had no rights anymore. >> they cut the wages. >> we no longer had insurance.

>> basically cut our throats. >> i'd like to say to the people of massachusetts if you think it can't happen to you, think again, because we thought it wouldn't happen here either. >> mitt romney. i don't mean to be callous, about you there are people all over the world who would love a job flipping hamburgers in america. romney. in business he specialized in low wage jobs but made $11 million for himself in two years. now he favors policies to benefit the wealthy at the expense of working families. romney favors a $100 billion tax cut for the weltiest 1% of americans, and billions more in other tax breaks for the rich. romney. trickledown economics and a millionaire's tax cut. whose side is he on? >> all those ads are from 1994. but you know what i think this is? i think this may be the ghost of the dear departed ted kennedy who ran those ads against mitt romney reminding the democratic party the way it is supposed to run campaigns. what it is supposed to be running on, and what it is supposed to be working on. these ads aren't just important

because of mitt romney being the front-runner in presidential politics right now on the republican side. running again is the guy who can create jobs because with great work experience at bain capital. these ads are not just about him as a candidate. these are as fresh today as they were in 1994 because these are about the differences between democrats and republicans on what really matters to americans. and frankly, it's not this stupid debt ceiling fight that could be settled at the drop of a hat if congress wanted it to be over. it's jobs. it's unemployment. what was the unemployment rate in july of 1994? it was 6.1%. today it is 9.2%. we are now coming out of the deepest, most jobless recession since world war ii. and the republicans are proposing again the same kind of stuff that mitt romney was campaigning on in 1994. policies that will help the job creators, policies that will help the richest people in the country at the expense of people who are hardest hit by this brutal economy.

and what people want to hear about frankly is not long-term proposals for debt reduction three decades from now. what people are waiting to hear from washington is how are we going to get more people back to work. and while washington is convulsed right now with something else entirely, with the same fake debt ceiling fight, once again, you can look to the states to see this real fight happening in earnest and articulated very well. the best political ad i think so far of 2011 is being run right now by left-leaning wisconsin group that is trying to oust one of the republican state senators in that state. i think this is the best ad of the year so far. watch. >> to balance wisconsin's budget, seniors, nurses, small business owners, firefighters and families are all paying their fair share, but corporations and the super rich are being let off the hook. thanks to senator olsen's vote, families will pay more in taxes but big corporations and the rich will get millions in tax breaks. olsen is making devastating cuts

to our schools and health care programs instead of asking those who can afford it to pay their fair share. >> if you could run those 1994 bain capital ads directly with just updated hairdos, you could run that wisconsin luther olsen ad by swapping in paul ryan ron johnson or any republican not in wisconsin who has been supporting republican economic proposals about jobs and how we should be dealing with our lousy economy by shoveling more resources to the rich and away from our hurting population. the phrase is economic populism. within the circumference of that circle there, you can't say economic populism without sneering or spitting. but in the rest of the states, it is why people know why there is a democratic party in this country at all. economic populism is the basic

concept that there is a force in politics to defend the rights of people who have to work for a living or people who would like to work again if they could find a job against corporate interests and reach peoples' interests draining the country dry. a poll just released in wisconsin this week articulates this point better than anything else. for whose benefit is wisconsin's state government run? the percentage of wisconsinites saying their state government is being run for a few big interests is 65%, nearly 2/3. the number saying that wisconsin state government is run for all of the people, just 28%. that's what it looks like in the polls in wisconsin. that's why these messages resonate. and here's what it looks like on the ground in wisconsin. >> governor walker and the republicans just gave over $100 million in tax cuts to corporations. and now they are asking teachers and nurses to pay for it. and attacking workers' rights to negotiate for fair benefits.

>> it will probably cost us between $400 to $500 a month in income. i tried not to think about it, just be out here on the square. it's not selfish. it's just survival. >> i have looked at the issues that are being discussed here in madison, and they are not unique to madison or wisconsin. >> this is republican class warfare, an attack on the middle class. this is a battle we need to win. >> that ad was run by the progressive change campaign committee in the throes of the wisconsin union stripping fight. and you can see from the polling that this message resonates for a reason. you can also see that from the election results there this week as there was huge turnout in the democratic primaries to unseat republican state senators in wisconsin who sided with scott walker, and the republican plan in these elections to cause chaos failed miserably. in minnesota, a shutdown in the

state government for two weeks now. and the democratic governor of minnesota today tried to break the impasse by saying, ok, republicans, you can have some of the things that you wanted that forced this shutdown. but i'm not caving on, you know what i want in exchange for ending the longest shutdown in state history, i want $500 million to pay for infrastructure projects to put people back to work in this state, thousands of jobs. a half billion dollar bond issue for infrastructure, for jobs, for building our way out of the economic crisis and putting people back to work and rebuilding the spine on which the whole private economy hangs on that state or any state. the democratic governor of minnesota, mark dayton that, is his condition for coming to an agreement. he told republicans you can't lay off the thousands you want to lay off from state government, stop with putting more people out of work, and we are going to do jobs, jobs, jobs. if everything else has to go, we have to do jobs. they are fighting like heck for

jobs, jobs, and jobs. ted kennedy beat mitt romney in 1994 on jobs, jobs, jobs. and yet democrats in washington right now, tonight, are, what, at this point reduced to trying to save the country's credit score. this fight in washington was forced by congressional republicans. and congressional republicans are losing it. the country trusts president obama and the democrats to deal with this matter more than they trust republicans. if catastrophe happens because of this standoff, people will blame the republicans for making it happen. republicans picked this fight. they forced this fight. they picked this fight. and they are in the process of losing this fight. so here's the big question. will democrats be able to pivot from winning this stupid fight in washington that didn't have to happen, will they be able to pivot from that into winning the real fight for jobs, for infrastructure, for stimulus, for a freaking wpa or something, some other big, bold proven

thing to save the economy from this jobs disaster that is turning out to be even worse than we ever could have expected even a few months ago? the real crisis. will democrats in washington take their cues from what's happening in the states and wage and win the real fight? that's next. your finances can't manage themselves. but that doesn't mean they won't try. bring all your finances together with the help of the one person who can. a certified financial planner professional. cfp. let's make a plan. i've heard of it, but i haven't seen one up close. what's the word around the sink? that it removes 3 times more soap scum per swipe, and it came from outer space. it is not from outer space! no, man, it's from outer space.

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breaking news at this hour. president obama is challenging the immediate end of the don't ask, don't tell policy. the president of course signed the repeal of the law back in december, but don't ask, don't tell is still technically in effect, while a long, slow, careful repeal process plays out. that long, slow, careful repeal process is due to keep the policy in place until approximately this fall. that was the plan until last week, when the ninth circuit u.s. court of appeals ruled that the don't ask, don't tell policy could not remain in place any longer. that the pentagon had 10 days to stop enforcing it altogether. that ruling, that court decision, is what the obama administration says don't it is

challenging. the injunction against enforcing the policy is being challenged by the obama administration. they are appealing, even as the administration supports the eventual end of the policy. we will keep you posted on how this all shakes out. we'll be right back. [ p.a. announcer ] announcing america's favorite cereal is now honey nut cheerios! yup, america's favorite. so we're celebrating the honey sweetness, crunchy oats and... hey! don't forget me!! honey nut cheerios. make it your favorite too! : switching to geico reon car insurance? or more host: do people use smartphones to do dumb things?

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ceiling so america can pay back what we already owe. this little press release doesn't look like very much, but this is wall street-ese for please consider freaking out now. standard & poor's has warned senate democrats it might lower its opinion of u.s. creditworthiness if congress lets america default on its debt. late in the day today, we learned that standard & poor's has placed its aaa long-term and a one plus short-term sovereign credit ratings of the united states on credit watch with negative implications. in other words, everybody freak out! look what happened this afternoon with congress and the white house seeming no closer at all to a deal on this thing. today the u.s. treasury asked investors to lend america $13 billion. $13 billion, ok? it's a fair bit of money for loans that would last 30 years. so real money, real time. what happened when america asked investors if they wanted to

invest in america, loan it some money? investors came running to lend america money. the bloomberg news headline, treasury bond auction demand defies warning. quote from a banker guy, it's a great auction. clearly, wall street at least so far has not been thinking we are stupid enough as a company to bumble our way into defaulting on our loans with no real reason to do so, to commit the equivalent of an own goal, to kick the ball into our own blessed net. wall street apparently does not seem to be reacting much to the political crisis that is consuming washington, d.c., right now. but you want to see what is making wall street really jumpy, though? yesterday morning, federal reserve chairman ben bernanke went to capitol hill and told the house financial services committee that the nation has a serious problem with unemployment, which is the opposite of news to people in the part of america that is not capitol hill.

mr. bernanke told them that the fed is watching for signs that the economy is really, truly faltering again. he says if he sees those signs, the fed is ready to provide another round of stimulus. the fed is willing to try to goose the economy to get it going, to help create jobs and put people back to work. the hearing started at 10:00 a.m. and this is what wall street did in response. buy, buy, buy, everybody, buy, quick, invest in the economy again. this thing is moving. after the house yesterday, this morning mr. bernanke gave his report to the senate. and he dialed things back. mr. bernanke said maybe, all in all, now, meaning right now, maybe now, as in right now is not really the right time for goosing the economy, or helping, or stimulating, or however you want to put it. not necessarily righaway. the hearing started at 10:00 a.m. and then this is what happened. everybody out of the pool. run away. the ship is sinking. pick your metaphor and get out of here with it in a hurry. at least for now wall street is not lying awake nights over this

washington, d.c., self-made crisis about republicans refusing to vote that the country shouldn't go into default and shut down. but the real american crisis, the one about jobs and the economy, that is a problem. that is a real problem. you do not always find wall street taking the side of the american people on economic issues. but today, yes. joining us now is democratic congressman barney frank of massachusetts, the ranking member of the house financial services committee and co-sponsor of the dodd-frank wall street reform and consumer protection act passed last year. nice to see you. >> thank you, rachel. >> right before the show tonight, news crossed that standard & poor's has put the u.s. on credit watch with a one in two chance it could lower the u.s. credit rating. what do you think of the impact of this is? >> it's going to be negative. but i have to say i have been very critical of the ratings agencies, and i think they did a terrible job of overrating mortgage securities.

they are unfair to states. but in this case, i think they had no choice. it's important to note, and you made this clear, it's not because our economy is in any serious trouble or that we can't repay. it is that the right wing that has taken control of the republican party might temporarily refuse to pay because they don't think it will make any difference. and there may be some sense on the part of some that, oh, people can't be that crazy. but they haven't lived with these people for six months the way i have. and, yeah, they are that divorced from reality. that's a better word than crazy. and this is an indication that if we don't make the payment, you are going to see serious trouble. now, noting that the auction went well, but that's as you know a 30-year auction. and nobody thinks that the default if it happens it will last for a very long time. so if you are talking about a 30-year time period, yeah, you'll get your interest over that 30 years. but there are short-term things that have to be done. and i think it's very clear with those ratings coming out that if

the date passes, august 2, when we are now going to be unable to make some of these payments that we've got, that's going to cost us some money. it's going to cost us, you know, we're in the -- we're fighting as you said to get a recovery. and companies have told us the biggest problem is uncertainty. that that's the biggest problem. nothing has created more uncertainty than this right-wing threat not to pay our debts. >> president obama says that he is willing to negotiate with republicans for big spending cuts. republicans have been demanding trillions in cuts. today the fed chairman warned the senate against that. he said the recovery is still rather fragile. and he said sharp and excessive cuts in the very short-term would potentially be damaging to that recovery. how do you explain those two things going on simultaneously? >> well, it's a timing question. in fact, i had exactly that conversation with chairman bernanke yesterday. he said there are headwinds in the economy that might cause a

slowdown in recovery. and one of the headwinds he listed was effective fiscal timing. i noted in my opening statement that since the summer of 2009 when we had just gotten the benefit of the stimulus, we have lost half a million jobs in state and local government. in fact, all this year, and every month the private sector has gained jobs, averaging about 160,000. not as much as we'd like. but every month the state and local government has lost jobs. that's teachers, firefighters, public works employees, and day care workers being laid off. and the way you put those two together is this. in the near term, that is for the rest of this year, we should not be cutting. in fact, we should be spending more. the quickest and best way to do that is provide greater assistance to state and local government, because the right wing in the house is going the opposite direction, planning to cut the cops program by which we provide federal help to keep the police on the street. what i make -- what i think makes perfect sense is to say, yes, over the longer term, we have to bring down the deficit. but those cuts, whatever we do, the increase of revenue, which

you ought to be a part of this, shouldn't go into effect for the rest of this year. so that for the next six months, we should be stimulative. but with one exception. we could make cuts now of over $100 billion a year on an annual rate that would have no negative effect on jobs. well, it would. i take it back. it would have negative effects on jobs in baghdad, kabul, kandahar, in other parts of the iraq and afghanistan. and the irony of course is that we are being told that we are in this terrible crisis, when the republicans brought out a military bill that increased the military by $17 billion, gives more money to iraq and afghanistan, and i have to say i am very nervous that the president might agree to keep troops in iraq next year, which is longer than george bush wanted to keep them there. so, yeah, i think we can in the short-term save a lot of money by bringing the troops home with no negative job impact.

but to get back to your question, what mr. bernanke said correctly is, yes, over the long-term, you should have a plan for deficit reduction from both higher taxes in my judgment and spending cuts. but in the short-term, if you were to do that, you would slow down the recovery. and that's why it's a timing issue. >> in terms of what you just said there about defense cuts, and what might be possible in this congress, i feel like the things that i have heard from republicans that seem like they have sort of silver linings around them economically is they say they do like infrastructure spending, even though they have been voting against it, and there are some republicans who are saying the wars in iraq and afghanistan should be wound down and quickly. there are savings there. is there any way that there could be sort of a third way solution, wherein some defense money is put toward infrastructure in the united states directly? >> sure. if the votes are there. i had an amendment. i was being very moderate. i moved that instead of giving

$17 billion additional to the defense department we give them only 8.5 billion. and we got 182 votes. that's better than we would have gotten last year, but unfortunately 40 votes short of a majority. unfortunately, right now when the republicans talk about supporting infrastructure, it's in iraq and afghanistan. we're doing a lot of infrastructure spending there. we don't get much of a bang for our buck. but the republicans who oversee -- they see corruption more than it exists in programs here in america. and can't see it when it hits you in the face in those countries. >> congressman barney frank of massachusetts, always a pleasure to have you here. >> thank you, rachel. bill moyers will be joining us tonight for "the interview." stay with us. somewhere in america, there's a doctor who can peer into the future. there's a nurse who can access in an instant every patient's past. and because the whole hospital's working together, there's a family who can breathe easy, right now.

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the fbi opened an investigation today into the possibility that journalists hacked or tried to hack into the phone records of people killed on 9/11. fbi sources telling "the new york times" that the fbi inquiry is still in its preliminary stages. it will probably be handled by two squads here in new york, one that covers cyber crime, the hacking part, and one that covers corruption. peter king of new york had written to the director of the fbi requesting the investigation after news about potential 9/11 hacking emerged in the rupert murdoch "news of the world" scandal in england.

former new york mayor rudy giuliani is the next most obvious person to be asked to react to these allegations about 9/11 victims having their phones hacked. these days, rudy giuliani is sort of unavoidable for comment. he is half running for president with three stops in new hampshire just today, as news broke of the fbi's 9/11 investigation. rudy giuliani is a contributor at the murdoch property that is the fox news channel. he is a politician who has benefited greatly from the support of mr. murdoch's lurid new york city tabloid "the new york post." today, he talked about debt reform, the republican primary, going to law school in the 1960s, and why being the mayor of new york on 9/11 gives him a special connection to members of the military fighting in iraq and afghanistan. >> because i feel that the reason they are there started in my city on september 11, 2001. that is where they came and attacked us. >> it was not until later in the day at a biker rally in new hampshire and an interview with

cnn that mr. giuliani addressed the address of rupert murdoch and this scandal. and when i say he addressed mr. murdoch, what i mean is that he defended mr. murdoch. from the associated press, quote, rudy giuliani told new hampshire voters late thursday that the company's chief executive, rupert murdoch, is a very honorable, honest man. giuliani says he has confidence in rupert murdoch, a regular acquaintance, despite allegations that one of murdoch's companies may have tapped into the voicemail of 9/11 victims. rudy giuliani in fact is going to make another run for the presidency. on the platform, famously described by his rivals last time around as a noun, a verb, and 9/11, anything borne out under investigation about mr. giuliani's friend, mr. murdoch, hacking the cell phones of 9/11 victims, is going to be a hard one for him to spin on the campaign trail. that is going to be a big deal in tomorrow's news, i am guessing. the interview is next tonight.

it is the great bill moyers. please stay tuned. ♪ we believe doing the right thing never goes unnoticed. liberty mutual insurance. responsibility. what's your policy?

last night on this show, we hosted a former federal prosecutor named jay fahey to try to understand whether or not

the scandal engulfing rupert murdoch's media empire, particularly in britain so far, is likely to change that media empire here as well. mr. murdoch's company is not just a massive company, it is massively influential in u.s. politics, particularly in conservative u.s. politics, because his properties here include the "wall street journal," the most influential business newspaper in the country. and also "the new york post," the most influential tabloid newspaper in the country. and the fox news channel, which is a very successful full employment program for republican candidates. when the rupert murdoch scandal broke about bribery and illegal phone hacking as a regular way of doing business at his news properties, rupert murdoch had to drop his $12 billion bid to buy a satellite television channel in britain. had the deal gone through, he

would have controlled 40% of all commercial television in britain. here it's 27 tv stations and the "wall street journal" and the fox news channel and "the new york post" and, and, and, and. i think the high noon light of day question to ask about all this is how vulnerable that empire is now that it's all come crashing down. that is the high noon question. the midnight question, though, how vulnerable have we been all along, living under that empire's influence. joining us now for "the interview" is the big thinker among all us, bill moyers, founding organizer of the peace corps, press secretary to lyndon johnson. the deepest, brightest, most fascinating interviews from bill moyers journal are collected in this book of the same name. bill, so happy to have you here. >> pleasure to be with you, rachel. >> one of the things i was struck by in reading your book and watching the show is the respect that you have for

individual journalists. and the contrasting worry you have about the media as an institution today. how do you think we are doing at explaining our role to each other? >> not that well. i mean, some journalists do it very well, and others don't. but we don't explain it very well to the public at large. and i guess we can't. the murdoch scandal doesn't help. a group of people already held in low repute by the public at large. in fact, it's very interesting that what rupert murdoch had been doing to the royal family, to parties of england, to celebrities, didn't create much stir. in fact, lots of people liked it. but when the hacking apparently and allegedly went into the family of the phones of this little girl, who was murdered, and they thought for a while she might be alive because the phone calls were deleted, the public